PostFinance, Sygnum Bank, and UBS, collaborating under the Swiss Bankers Association (SBA), have successfully completed a proof of concept for a deposit token, marking a significant milestone as Switzerland’s first legally binding interbank payment executed on a public blockchain using bank deposits.
This proof of concept serves as a foundational element in developing a standardized infrastructure for blockchain-based financial services within Switzerland. While the country’s domestic payment system is well-regarded for its efficiency, the feasibility study highlighted certain limitations, such as the inability to program traditional payments, restricted availability for large transfers, and minimal integration with blockchain ecosystems.
By leveraging blockchain technology to represent bank deposits, the providers suggest that future payments could be processed not only instantaneously but also within a shared infrastructure fully integrated into automated business processes. The use of smart contracts is poised to enable conditional payments, mitigate risks, and quicken complex transactions, thus enhancing sectors like securities trading, insurance settlements, and machine-to-machine transactions. This level of automation is anticipated to unlock new digital services, giving customers faster, more secure, and transparent payment options.
The proof of concept tested two primary use cases: interbank payments between customers and an escrow-like exchange of Deposit Tokens for tokenized assets. These transactions were executed automatically via smart contracts, with an emphasis on off-chain transfers of fiat currency initiated by blockchain-tokenized payment instructions. The governance structure established for the initiative included clearly defined roles and smart contracts, ensuring technical security and compliance with regulatory requirements.
Findings from the pilot confirm that deposit tokens have the capability to operate across banks on a public blockchain while adhering to legal and regulatory frameworks. However, the report indicates that expanding this initiative will necessitate design modifications and collaborative efforts among other banks, infrastructure providers, and regulatory bodies.
Martin Hess, chief economist and head of the SBA’s digital currencies project, remarked on the strategic significance of the tested Deposit Token, underscoring its role in paving the way for more innovative digital payment solutions. He noted that the successful proof of concept sets the stage for further developments in this area.
Similarly, Alexander Thoma, head of digital assets at PostFinance, highlighted the potential of the deposit token to enhance the efficiency and security of payment transactions. He expressed eagerness to progress with this innovative solution, signaling PostFinance’s commitment to contributing its expertise in payment transactions and digital assets.
Thomas Eichenberger, deputy CEO of Sygnum Bank, reiterated the company’s belief in the transformative power of blockchain technology in reshaping financial markets and payment systems. Eichenberger emphasized that Sygnum’s pioneering efforts, in collaboration with banks like UBS and PostFinance, aim to foster innovation and deliver lasting value to the Swiss financial sector.
Christoph Puhr, digital assets lead at UBS Group, noted that the proof of concept illustrates the feasibility of achieving interoperability for bank money through public blockchains. He expressed optimism about the potential for accelerating innovation in tokenized assets, positioning it as a crucial step in shaping the future of financial systems both in Switzerland and globally.
